By Georgina McCartney and Arathy Somasekhar
HOUSTON (Reuters) -Oil prices rose for a third day on Wednesday, drawing support from a larger-than-expected fall in U.S. gasoline and distillate stocks a day after the U.S. government cut its estimates for output growth.
Brent crude futures rose 39 cents to $78.98 a barrel as of 1144 a.m. ET (1644 GMT), while U.S. West Texas Intermediate crude climbed 37 cents to $73.68.
U.S. gasoline stocks fell by 3.15 million barrels last week compared with analysts’ estimates for a build of 140,000 barrels, according to the U.S. Energy Information Administration (EIA). Distillate stocks fell 3.2 million barrels, compared with estimates for a 1 million barrel draw.
Crude stocks, however, posted a larger-than-expected build of 5.5 million barrels as production recovered after a cold snap, while U.S. refiners stepped up maintenance. Analysts had estimated a smaller build of 1.9 million barrels.
“The main contributor to the crude oil build was that refineries have had difficulty returning operations from the freezing cold weather over the last couple of weeks,” according to Andrew Lipow, president of Lipow Oil Associates.
Refinery utilization shrank 0.5% to 82.4%. On the U.S. Gulf Coast, the deep freeze knocked off 15% of refining capacity, pressuring utilization rates to their lowest level since September 2021, according to EIA data.
On the supply side, the EIA cut its 2024 outlook for domestic oil output growth on Tuesday, putting it far lower than last year’s increase and predicting it would not reach December 2023’s record levels until February 2025.
This all strengthened the case that the oil market will be balanced in 2024, analysts at Haitong Futures said in a note, adding that oil prices should remain in a $10 range around current levels.
U.S., Qatari and Egyptian mediators prepared a diplomatic push to bridge differences between Israel and Hamas on a ceasefire plan for Gaza after the Palestinian group responded to a proposal for an extended pause in fighting and hostage releases.
Traders are following the situation in the Middle East, especially Iranian-backed Houthi rebels’ attacks on shipping in the Red Sea that have disrupted traffic through the Suez Canal, the fastest sea route between Asia and Europe and one that carries nearly 12% of global trade.
In the longer term, the International Energy Agency (IEA) said on Wednesday that India is expected to be the largest driver of global oil demand growth between 2023 and 2030, narrowly taking the lead from top importer China.
That comes as struggling large economies, including China’s, dent confidence in the global oil demand outlook.
(Reporting by Paul Carsten in London and Arathy Somasekhar and Georgina McCartney in Houston and Muyu Xu; Editing by Paul, Christian Schmollinger, Louise Heavens, David Evans, Barbara Lewis and Nick Macfie)
